AMERICAS FREE TRADE: Nasty and Brutish

Wrobel, Paulo, The World Today

Jobs and prosperity are at stake as a series of trade talks - some a decade in the making - gather momentum. But the world has changed from the benign internationalism when President George Bush senior dreamed of free trade from Alaska to Tierra del Fuego. Now deals are done bilaterally in a nasty and brutish environment.

A CROWDED AGENDA OF BILATERAL, REGIONAL year ahead. At the global level, the World Trade Organization (WTO) is working hard to restart meaningful negotiations after the Doha round, launched in 2001, virtually stalled with the fiascos of the Seattle and Cancun summits. Mired in a growing number of disputes, the multilateral trade system is seeking a common agenda to leave behind the disagreements between developed and developing nations, so detrimental to trade expansion and wealth creation.

In parallel to global trade talks, many regions are aiming for free trade agreements this year. None is busier than the Americas where, according to the original timetable, 34 nations - all except Cuba - are negotiating a Free Trade Area of the Americas (FTAA), the largest trade bloc in the world.

This is by no means easy, and many predict that the deadline will have to be postponed. After ten years of talks, the FTAA has moved away from the idea of a single free trade zone and introduced what has been called FTAA a la carte or FTAA-lite.

This is to be a trade bloc of flexible geometry, where individual nations will pick and choose their own level of commitment. Contentious issues including agriculture subsidies, intellectual property, government procurement and investment rules are not part of the deal, and will be dealt with through the WTO or bilaterally. The agreement now being considered has only minimum standards for the 34 American nations; it has to be complemented by a myriad of bilateral and sub-regional agreements.

Tougher

Ten years is a long time in politics, even more so in trade talks. During this time, the spirit of international cooperation that pervaded much of the immediate post-Cold War era has waned, and Latin America, then a top priority for United States foreign policy, has been forgotten under the pressures of a complex global agenda.

The relatively benign atmosphere that prevailed for most of the 1990s has also given way to a much tougher and more competitive global trade environment. Trade disputes abound, Europe and the US have a number of difficult, contentious disagreements, and the pressures for both retaliation and protection are growing on both sides of the Atlantic.

China has emerged as a global player, the third largest trading power, replacing Japan as the main 'villain' blamed for the catastrophic US trade deficit. Emerging economies such as Brazil, India and South Africa have become much more assertive in defending their own interests.

The world in which trade negotiations and disputes could be resolved through direct dialogue between Europe, the US, and a few other big economies seems to have vanished forever. We now face the real world of multilateral trade bargains, a nasty and brutish affair.

There is much to gain and lose - trade remains a vital means of achieving economic prosperity. What we are talking of here is jobs and wealth creation.

Despite its relative decline in the last two or three years, global trade reached $7 trillion in 2002. Almost half of that was through preferential agreements, either bilateral or regional.

The WTO reports that there arc now 125 regional trade agreements and this number could double by the end of the decade. Ambitious bilateral and regional schemes to boost trade and investment are under way in virtually all nations and regions, in parallel with the contentious global WTO negotiations.

Darina and ambitious

None has been more daring than the FTAA. In its original design it was extremely ambitious, encompassing eight hundred million people and an economic output of over $13 trillion, over three-quarters from a single nation, the US. …

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